There is a subtle, but increasingly clear shift in the early-stage ecosystem across Africa. The global funding slowdown has not only changed the pace of dealmaking, but it has also begun to reshape the conversation entirely.
Founders are now expected to show a path to profitability earlier than ever. Decks are now interrogated for business fundamentals. Margins, not markets, are now the focus. Around this shift, a new vocabulary has emerged, one that urges us to think not in terms of unicorns, but donkeys, camels, and gazelles. It is not unreasonable as exits are rare, capital is slow, and survival feels like success.
This turn toward capital efficiency is often framed as maturity. But it’s worth asking: what kind of innovation ecosystem are we designing when we make viability the price of entry? And what are we losing when we turn experimentation into a luxury?
Not enough unicorns or startups?
There’s a growing view that Africa’s unicorn moment was premature, that we chased scale too quickly. We should have been building modest, durable startups with low burn and healthy margins all along. However, that conclusion does not hold up to data or context.
If we look at unicorn-to-startup ratios, Africa doesn’t stand out for having too many unicorns, it is producing too few startups. Nigeria’s ratio is nearly identical to India’s, and Brazil’s is even lower. South Africa and Kenya have yet to produce any unicorn startups. If unicorns are rare and rightly so, it’s not because the continent aimed too high; we haven’t made enough ambitious bets.
Unicorns were never the point, it was the permission to pursue large, hard, unproven outcomes. What used to be a space for improbable ideas is becoming a proving ground for tidy business plans. Founders are told to act like established companies. But what if the thing they’re building isn’t a business yet—at least not in the traditional sense?
Efficiency can be the enemy
Late Harvard Professor of Business, Clayton Christensen, extensively argued in his works that disruptive innovation rarely emerges from mature firms because their internal systems reward predictability over exploration. Disruptive ideas, by contrast, tend to emerge from outside, precisely because they don’t make business sense at first.
That dilemma is no longer confined to incumbents. It’s now baked into the way early-stage African startups are being evaluated. There’s increasing pressure on founders to present plans that are tidy, legible, and revenue-positive, often too early. But what happens when the problem you’re solving isn’t monetisable? Or when you’re solving for nonconsumption?
Spotify, for example, ran losses for years. It was entangled in licensing issues with labels and faced competition from America’s Big Tech. Yet, it disrupted what it means to distribute music because it had time and room to evolve.
Under today’s early-stage lens, Spotify might not make it out of seed.
If capital is structured to reward only early traction and tidy monetisation, we’ll lose the companies that need time to find their form.
The same can be said of Intel, or, more precisely, what became of it. Intel was once an innovation engine, backed by early risk capital and shaped by a culture that tolerated big, technical bets. But in later years, it began prioritising margins and stock buybacks over deep research and development. In the process, it lost the cutting edge in semiconductors to competitors who chose to keep innovating even when the path was less immediately profitable. Intel is now a cautionary tale: not about failure, but about the cost of institutional success without strategic imagination.
Innovation needs space to grow
It’s useful to remember how Silicon Valley earned its name. Before the internet companies, the Valley was built on semiconductors, a physical technology that took years to commercialise, with no clear playbook. The early giants, Fairchild, Bell Labs, and Intel, weren’t startups in the modern sense.
Bell Labs invented the transistor and gave its scientists freedom to explore ideas that didn’t have commercial use yet. Fairchild Semiconductor was born when eight engineers broke away from Shockley Labs to work on integrated circuits, backed by a risk-tolerant investor who trusted the team, not the market data. Intel was seeded in that same tradition: a belief that good engineers, working on the right problems, would eventually figure it out.
As History Professor Chris Miller recounts in Chip War, much of the early hardware ecosystem survived not because it was profitable early, but because it was protected by design from the pressures of short-term viability. Government contracts, defence research, and long-term horizons gave it the space to grow into its significance.
That protection created surface area. It allowed the improbable to take shape.
Africa does not have Bell Labs or Defense Advanced Research Projects Agency (DARPA), and that’s precisely why its early-stage capital must take risks others won’t. If even our risk capital becomes risk-averse, we leave no space for the startups we can’t yet explain.
Venture capital does not need to be right every time
Africa doesn’t need to stop funding businesses that work. It needs to keep making space for businesses that don’t look obvious yet. Founders should care about unit economics. Investors should interrogate assumptions. But early-stage funding exists to subsidise uncertainty. To let people work on things that might not look viable today but could change everything later.
We need space for founders solving problems whose solutions don’t yet fit a market map, people trying to build category-defining infrastructure, not just category-compliant products.
If early-stage capital begins to behave like growth equity, then who will fund the strange, possibly transformative bets?
We often say “Africa is different”, and that is true. But it doesn’t mean we can’t learn from what made other ecosystems work, or shrink our dreams to gazelles and donkeys.
In the end, what we choose to fund is what we believe. And right now, we seem to believe in things that are tidy, modest, and legible. That belief is quietly shaping what gets built as startups are increasingly blowing the trumpet of profitability.
What we may get, if we’re not careful, is an ecosystem that becomes very efficient at building small things and very bad at imagining big ones.
Tolu Oluwadare is a venture fellow at Future Africa, the fund for Africa’s future. His interests lie at the intersection of technology, markets, and development in emerging markets.
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